You are given the following information of Legalguntraders Pty Ltd
The current market price per share on June is R A dividend of R has been declared and paid
during the previous financial year, ending May It is expected that dividends will grow at a constant rate of
per year for the foreseeable future. The market rate of return is the riskfree rate is and the beta is
The company holds Rface value debentures which are redeemable after six years at face value. The
annual interest payment on the debentures coupon rate is The current market return for similar debentures
with a life of six years is Assume the current company tax rate is Determine the current cost of equity
for Legalguntraders Pty Ltd You must use the capital asset pricing model CAPM Set your calculator at
four decimal places and round your final answer to two decimal places.
a
b
c
d
